EXECUTIVE SUMMARY

New orders were down 6% in June 2024 compared to June 2023, which follows the 3% year over year decline last month. New orders were also down 8% compared to the prior month of May 2024. However, year to date through June 2024, new orders are still up 3% compared to 2023, though that spread has narrowed significantly with the last two months’ declines.

June 2024 shipments were down 8% from June 2023, but relatively flat with May 2024. Year to date through June 2024, shipments are down 9% compared to 2023.

June 2024 backlogs were down 6% compared to June 2023, and down 2% from May 2024.

Receivable levels were down 1% from May 2024, and also down 7% from June 2023, with both being materially in line with shipments for the same periods.

Inventories and employee levels are again materially in line with recent months, but down from 2023, indicating that companies have aligned levels to match current operations.

National

Consumer Confidence

The Conference Board Consumer Confidence Index® rose in August to 103.3 (1985=100), from an upwardly revised 101.9 in July.

The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—improved to 134.4 from 133.1 in July.

The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—also improved in August to 82.5. As the Expectations Index for July was revised up to 81.1, August marked the second consecutive month of the Index above 80. (A reading below the threshold of 80 usually signals a recession ahead.)

“Overall consumer confidence rose in August but remained within the narrow range that has prevailed over the past two years,” said Dana M. Peterson, Chief Economist at The Conference Board. “Consumers continued to express mixed feelings in August. Compared to July, they were more positive about business conditions, both current and future, but also more concerned about the labor market. Consumers’ assessments of the current labor situation, while still positive, continued to weaken, and assessments of the labor market going forward were more pessimistic. This likely reflects the recent increase in unemployment. Consumers were also a bit less positive about future income. ”On a six-month moving average basis, purchasing plans for homes fell to a 12-year low. While buying plans for cars were little changed, buying plans for most big-ticket appliances increased slightly. Additionally, more consumers reported plans to buy a smartphone or laptop/PC in the next six months.

On a six-month moving average basis, purchasing plans for homes fell to a new 12-year low, while buying plans for cars improved slightly. Buying plans for big-ticket appliances were up on average but the increase was driven by only a few items: refrigerator, TV, and washing machine. Plans to buy a smartphone or laptop/PC in the next six months increased again.

Housing

Existing-home sales improved in July, breaking a streak of four consecutive monthly declines, according to the National Association of REALTORS®. Three out of four major U.S. regions registered sales increases while the Midwest remained steady. Year-over-year, sales rose in the Northeast and West but retreated in the Midwest and South.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – ascended 1.3% from June to a seasonally adjusted annual rate of 3.95 million in July. Yearover- year, sales fell 2.5% (down from 4.05 million in July 2023).

Single-family home sales grew 1.4% to a seasonally adjusted annual rate of 3.57 million in July, down 1.4% from the previous year. The median existing single-family home price was $428,500 in July, up 4.2% from July 2023.

Existing condominium and co-op sales in July were identical to June at a seasonally adjusted annual rate of 380,000 units, down 11.6% from one year ago (430,000 units). The median existing condo price was $367,500 in July, up 2.7% from the prior year ($357,900).

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.49% as of August 15. That’s up from 6.47% one week ago but down from 7.09% one year ago.

Sales of new single-family houses in July 2024 were at a seasonally adjusted annual rate of 739,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 10.6% above the revised June rate of 668,000 and is 5.6% above the July 2023 estimate of 700,000.

Compared to July 2023 on a seasonally-adjusted basis, sales were up 5.6% overall with sales also up 2.2% in the South, 3.3% in the Northeast, 17.1% in the Midwest, and 9.0% in the West.

Other
Real gross domestic product (GDP) increased at an annual rate of 3.0% in the second quarter of 2024, according to the “second” estimate released by the U.S. Bureau of Economic Analysis. In the first quarter, real GDP increased 1.4%.

The increase in real GDP primarily reflected increases in consumer spending, private inventory investment, and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

Compared to the first quarter, the acceleration in real GDP in the second quarter primarily reflected an upturn in private inventory investment and an acceleration in consumer spending. These movements were partly offset by a downturn in residential fixed investment.

Sales at furniture and home furnishings stores were up 0.5% in July 2024 from June 2024 on a seasonally-adjusted basis, but down 2.4% from July 2023.

Thoughts

June 2024 marked the second straight month in which both new orders and shipments declined over the comparable prior year month for the companies in our survey. This is in line with the 6% average decline in revenues reported by a representative group of the industry’s public companies in their latest quarterly filings.

As stated before, the national economic indicators continue to be “mixed” in July/August 2024. Specifically, consumer confidence inched up overall and the housing sales showed some signs of life compared to prior periods, not to mention a relatively positive earnings report from Home Depot. However, consumers are still concerned with the overall labor market in light of recent unemployment data and consumer debt remains high, which is a factor for certain sectors of the industry.

Meanwhile, ocean container rates, while still higher than we’d prefer, continued to decline in August compared to July overall. The latest World Container Index (“WCI”) indicates that spot rates decreased 3% overall last week.

There continue to be indications that interest rate cuts are coming, with many expecting that to occur at the Fed’s next meeting in mid- September. However, it could be next year before the full effect of those trickles down to the industry.

Of course, here in the States, we have the Labor Day holiday and its annual sales events coming up this weekend, which should provide some signal as to which way the industry is headed for the remainder of the year. I’ve read some reports that many retailers are cautiously optimistic, and I hope they are right. Happy Labor Day and happy selling everybody!

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